The newly completed Lekki Deep Sea Port is a landmark project in the city of Lagos. This is the first deep seaport in Nigeria with its construction gulping $1.5 billion. Lekki deep seaport which is located inside the Lekki Free Zone has a berthing depth of 16.5 meters and is designed to handle the equivalent of 2.7 million 20-foot-long container units a year.
Lekki deep seaport is located inside a 16,500-hectare free trade area and close to the Dangote Petroleum Refinery which will soon become operational too. Moreso, the master plan of the trade area also contains a proposed airport, a start-up community, and commercial and residential areas, which are a huge boost to the country’s economic outlook.
The projected plan and implementation for the port aim to boost Nigeria’s status as a maritime country and majorly increase its international trade. Differing from the widely held projection about the deep seaport, it is crucial to understand the challenges facing Nigerian ports and why experts are betting on the deep seaport to right these wrongs and boost international trade for the West African country.
Challenges facing Nigerian ports
The country’s woes are hinged on a lack of infrastructure which affects its supply chain and logistics, especially water transport which is used mostly for international trade.
Nigeria ranks 110 out of 160 countries on the Logistics Performance Index as of 2018. It had an overall score of 2.53 when indicators such as customs clearance process, international shipment, infrastructure, tracking and tracing, logistics competence, and timeliness were examined. This is despite being home to two of the busiest ports in West Africa.
Delays in cargo clearance, increase in cargo clearance charges, exorbitant demurrage fees, and port congestion are still recurring challenges in port operations. Cargo ships currently wait as much as a month offshore before unloading cargo in Lagos, Nigeria’s commercial hub and home to the country’s busiest ports. Besides, port congestion is estimated to cost Nigeria $55 million a day in lost economic activities. Consequently, it is imperative to create solutions that cut down congestion, delays, and loss of revenue.
The deep sea port as a game changer
The establishment of a deep seaport has become strategically critical for Nigeria’s maritime industry as it will contribute to the development and economic growth of the country. A change in port traffic or operation and port organization has a significant impact on the national economy, especially on the hinterland.
Mohammed Bello-Koko, the managing director of the Nigerian Ports Authority (NPA) said in an interview that: “It changes everything because Lekki will be faster, it has more space, and it is more modern.” He reiterated that when it becomes operational, the Lekki project will more than double the capacity of Lagos’s ports, and accommodate far bigger ships.
“It is a game changer that will bring back most of the cargoes we are losing to neighboring countries,” Bello-Koko further said. His assertion is evident in how countries are using panamax ports to tackle port congestion and boost their international trade.
Economic impacts of the Lekki deep seaport
As a commercial project of tripartite cooperation between China, France, and Nigeria, the Lekki port is of great significance for promoting Belt and Road Initiative (BRI) cooperation in Africa and revamping Nigeria’s economic dominance within West Africa and beyond. Nigeria’s Ministry of Transportation revealed that the Lekki Port is expected to generate $360 billion over the next forty-five years while creating nearly 170,000 jobs. How will the multimillion-dollar project turn around Nigeria’s economic fortune?
Reduce port congestion
Nigeria is losing money to port congestion, unnecessary delays, and long ship waiting times. If the deep sea port becomes operational, it will boost the country’s maritime profile and change its ratings on the logistics performance index. The resultant effect of lesser port congestion is a show of faith to maritime users and would help bring back most of the cargoes and investments lost to neighboring countries.
Show readiness for continental trading
The project is strategic for the economic growth of the Lekki Free Zone. This also indicates Nigeria’s readiness to engage in the African Continental Free Trade Area (AfCFTA) by providing the requisite supply chain and logistics channel for trade in goods. With the Lekki Airport in view, there will be an emergence of a Harbor City that can be internationally connected by air and a world-class integrated transport network of roads, rail, and bridges.
The AfCFTA will definitely thrive in a nation that has figured out logistics issues and is working towards improving them, which is what constructing the deep port will achieve for Nigeria’s economy moving forward.
Attract foreign investment
It is estimated that the port will generate up to $201 billion in revenue for state and federal agencies through taxes, duties, and royalties which in turn will help to boost the country’s capacity to further facilitate trade. This will only be possible if the deep port is properly functional and hence able to attract more investors to the nation.
The country has had a drought in foreign investment for years except for Lagos, but a deep port in the same state will attract more investment and with a more deep port in construction in other states, it will boost Nigeria’s international trade.
Boost non-oil exports
Data from the Nigerian Export Promotion Council (NEPC) revealed that Nigeria’s non-oil sector exported products worth $2.593 billion in the first half of 2022. This represents a 62.37 percent increase from the $1.59 billion exported within the same period in 2021.
Though non-oil export contribution to the economy is not as significant as oil export, the deep seaport will ensure that top exported products such as urea/fertilizer, cocoa beans, sesame seed, and aluminum ingots have more chances of getting out faster and not have to worry about congestion issues.
Ensure port digitalisation roadmap
The Lekki deep seaport proposes to improve Nigeria’s port digitalisation process by developing a contactless port. Many port countries have digitalised their maritime sector and are already reaping the benefits through increased international trade. Hence, Nigeria is on the right track by promoting a deep seaport and adopting port digitalisation.
Bloomberg reported that Nigeria is wagering that the operation of a deep sea port will help revive an economy grappling with soaring inflation, stagnating growth, and slumping foreign investment. Nonetheless, Nigeria already has the maritime advantage of the busiest ports in Africa. With the AfCFTA in place, the construction of more than one deep sea port, and digitalisation roadmap, it will certainly garner more trade interest within its region, continent, and globally.